Asian Equities Slide, Nikkei Down 3.16%; KOSPI Drops 4%; Oil Prices Extend Gains on Hormuz Tensions
Asian markets closed lower today, with Japan's Nikkei 225 falling 3.16% and South Korea's KOSPI dropping over 4%. Oil prices continued to climb, with WTI crude up 0.69% and Brent crude up 0.55%, driven by ongoing geopolitical tensions in the Middle East and concerns over the Strait of Hormuz. The US 10-year yield is down 0.38%, while the VIX is up 4.28%.
Lead
Asian markets closed lower today, with Japan's Nikkei 225 falling 3.16% and South Korea's KOSPI dropping over 4%. Oil prices continued to climb, with WTI crude up 0.69% and Brent crude up 0.55%, driven by ongoing geopolitical tensions in the Middle East and concerns over the Strait of Hormuz. The US 10-year yield is down 0.38%, while the VIX is up 4.28%.
Session narrative
Asian equities saw significant declines today. Japan’s Nikkei 225 index fell 3.16% to close at 65,328, led lower by Furukawa Electric (-13.51%), Softbank (-10.53%) and Fujikura (-10.12%). South Korea’s benchmark KOSPI dropped over 4% to around 6,560, as a global bond selloff lifted US 30-year yields and pressured technology and chip-related stocks. Indonesian stocks also slipped ahead of the Bank Indonesia rate decision. In economic data, Japan's core machinery orders rose 16.9% year over year, exceeding the 9.6% forecast. The Australian dollar hovered near a 10-week high below $0.71 despite RBA remarks, while the Philippine peso slipped past 61.8 per dollar to a new record low. China's central bank injected 327.4 billion yuan via overnight reverse repos and set the yuan midpoint at its strongest level since February 8, 2023. Geopolitical tensions in the Middle East continued to drive oil prices higher, with WTI crude gaining 0.69% and Brent crude up 0.55%. Iran issued warnings regarding ships concealing identities in the Strait of Hormuz and against Gulf states facilitating US military activity. A drone strike reportedly sparked a fire at the UFA refinery.
Cross-asset check
Equity markets in Asia were broadly negative. The Nikkei 225 fell 3.16%, and the KOSPI dropped over 4%. S&P 500 futures are down 0.09%, Nasdaq futures are down 0.34%, and Dow futures are down 0.01%. In commodities, WTI crude is up 0.69% and Brent crude is up 0.55%. Gold is down 0.45%, and silver is down 1.52%. The US Dollar Index is down 0.18%, with EUR/USD up 0.21% and USD/JPY down 0.28%. The US 10-year yield is down 0.38% to 4.71%. The VIX is up 4.28%.
Themes & continuing stories
Geopolitical tensions in the Middle East remain a dominant theme, with Iran's warnings regarding the Strait of Hormuz and its stance against US military activity contributing to elevated oil prices. The global bond selloff continues to impact equity markets, particularly in South Korea. Central bank policy remains a key focus, with the RBA warning of potential rate hikes and the Bank of Japan's future actions being closely watched by traders.
What’s ahead
Market participants are awaiting the Bank Indonesia rate decision later today. Also on the economic calendar are the UK CPI July 2026 Report, UK Core CPI YoY, UK Services CPI YoY, and UK CPI MoM. Traders will also monitor Fed Interest Rate Probabilities.